By IAN BERRY
The chief executive of Smithfield Foods, the world's largest
pork producer, is calling for the US government to waive its
mandate requiring the blending of ethanol into the nation's
gasoline supply as a worsening drought batters the nation's
corn crop and drives up prices.
In addition to a temporary waiver of the mandate, Congress
should pass a bill that would lower the federal Renewable Fuels
Standard when US corn supplies fall below a certain threshold,
Smithfield CEO C. Larry Pope wrote in an editorial in The Wall
Street Journal on Friday.
Smithfield buys roughly 128 million bushels of corn and corn
equivalents each year to feed its hogs, making it one of the
largest consumers of the grain in the US, Mr. Pope said.
Livestock and poultry producers are longstanding foes of the
ethanol industry, which now consumes roughly 40% of the US corn
Producers of the corn-based fuel additive argue that it returns
much of that back to livestock producers in the form of
distillers dried grain, an ethanol byproduct that is used as
But as corn prices have soared to record highs this month,
the livestock industry has intensified its criticism of
We can't control the drought. But we can and must
address the impact of politics on corn supplies and prices by
taking steps to ease the pressure and help prevent food
inflation, Mr. Pope said.
A waiver would ease requirements that refiners blend ethanol
with gasoline. Livestock producers argue the mandate props up
corn demand regardless of how high corn prices climb,
artificially inflating the market.
Mr. Pope also said he supported a bipartisan bill that would
automatically reduce the ethanol mandate when corn stockpiles,
as a percentage of total usage, fall below a certain level. The
bill was introduced by US Reps. Bob Goodlatte (R-Va.) and Jim
The Renewable Fuel Standard requires 15.2 billion gallons of
ethanol, most derived from corn, be blended into gasoline this
year. Mr. Pope called that figure arbitrary.
Last week, US Agriculture Secretary Tom Vilsack said the
drought puts livestock producers in deep trouble.
However, he said the situation wasn't bad enough to warrant a
reduction in government mandates for corn-based ethanol
There's no need to go to the EPA [Environmental
Protection Agency] at this point, based on the quantity of
ethanol that's currently in storage, Vilsack said at a
White House briefing on July 18. "There's no problem in that
area at this point in time."
Dow Jones Newswires